Risks of summer blackouts nationwide on the rise

If you thought gasoline prices were bad, natural gas prices topped $9 BTUs before pulling back but adding to the 196% gain over the past year, reinforcing the risk of power outages this summer. 

The North American Electric Reliability Corporation (NERC), a nonprofit entity formed to promote the reliability and adequacy of bulk power transmission in the electric utility systems of North America, recently warned of widespread summer blackouts in its "Summer Reliability Assessment" report. 

NERC is warning that some of the lowlights in the Midcontinent ISO (MISO) area that covers the Midwest United States; Manitoba, Canada; and a southern United States region that includes much of Arkansas, Mississippi and Louisiana is facing a capacity shortfall in its north and central areas, resulting in high risk of energy emergencies during peak summer conditions.

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NERC's mission is to monitor all of the interconnected power systems of Canada and the contiguous United States, as well as a portion of the Mexican state of Baja California, making its assessment all the more sobering.

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Ticker	Security	Last	Change	Change %
UNG	UNITED STATES NATURAL GAS FUND - USD ACC	13.14	-0.97	-6.91%

States are already preparing for the worst. Californian Gov. Gavin Newsom is considering keeping a nuclear power plant open to offset the impact of the loss of hydropower because of drought.

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And in Texas, residents are being urged to conserve electricity in the heat to avoid summertime blackouts. They remind us that extreme drought across much of Texas could produce weather conditions that are favorable to prolonged, wide-area heat events and extreme peak electricity demand.

They also warn that extreme heat increases peak demand and can be accompanied by weather patterns that lead to increased forced outages or reduced energy output from resources of all types.

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A combination of extreme peak demand, low wind and high outage rates from thermal generators could require system operators to use emergency procedures, up to and including temporary manual load shedding.

As drought conditions continue over the Missouri River Basin, output from thermal generators that use the Missouri River for cooling in the Southwest Power Pool (SPP) may be affected in the summer months.

Some say that climate change is to blame, but it can be the fight against climate change that may really be the culprit. Maybe we should not be replacing coal plants with wind and solar. The wind is not reliable and the wind turbines end up in landfills when they're retired. 

If climate change is a concern, we should revamp our nation's energy grid and power it with new nuclear plants and natural gas. Natural gas is much cleaner than coal, and nuclear power is the only source of energy that can provide massive amounts of electricity with no greenhouse gas emissions. It is time to leave the darkness and face up to the reality of our energy needs.

Phil Flynn is senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, professional traders and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at pflynn@pricegroup.com.